Earlier this month DCLG published stage 2 of their 2012-based household projections. Complementing the 2012-based projections released in February 2015, stage two gives a more detailed breakdown of household types with the total household numbers remaining unchanged at a national and Local Authority level.
When it comes to household formation – the likelihood of a person to form a household – the previous interim 2011-based DCLG household projection was widely accepted as showing suppressed household formation in younger age groups. The 2012-based DCLG projection shows growth of only 5,000 households per annum nationally in the 25-34 age group. This is 17,600 households lower than the interim 2011-based projection, showing that the 2012-based projections projects significantly lower growth in this age group. This suggests suppression is worsening in this age group, who are not forming households in the numbers seen in the past. This is due to factors such as worsening affordability of housing and the inability for first-time buyers to get onto the housing ladder.
The same pattern is evident in the 35-44 age group, with the 2012-based projection (6,000 households per annum) representing 9,300 households per annum less than the interim 2011-based projection (15,000 households per annum).
These patterns are significantly worse when compared with the pre-recessionary 2008-based household projections; the 2012-based projections representing a decline of 30,000 households per annum (25-34 age group) and 20,000 households per annum (35-44) when compared with the 2008-based projection.
To emphasise this further, the 2012-based projections project a change of 53% in ‘other’ households. This ‘other’ classification is defined as a ‘multi-person’ household. Furthermore the ‘couple and one or more other adult’ classification, defined as ‘a household which contains one or more married or cohabiting couple families with one or more other adults present’ is projected to rise by 27%. These two types of households represent the classifications with the highest household growth in the latest projections. Both emphasise the issue concerning affordability, suggesting that more and more people are having to live in multi-person households, thereby remaining ‘concealed’ and unable to form their own household.
In addition the stage 2 release provides variant projections at a national level, which show the effect of different assumptions including increased life expectancy, migration and fertility. It is these variant projections that really highlight the shortfall between the official projections (as published) and what may really be the case in reality.
As revealed earlier this year, the 2012-based projections project growth of 210,000 households per annum nationally between 2012 and 2037; however variant projections based on longer life expectancy suggests the projection could increase to 229,000 households per annum: a total difference of 225,000 homes over 25 years.
Equally a variant based on higher net international migration of 217,000 people per annum to England suggests growth of 237,000 households per annum; a 12.9% increase nationally from the projections as published indicating the effect of international migration on overall housing need. This should be considered in the context of recent quarterly migration estimates which put net international migration to the UK at 336,000 people in the year ending June 2015, suggesting that the real level of household growth is even higher than indicated by the variant migration projection.
So what’s the significance? This new information from DCLG increases the concerns regarding the 2012-based DCLG household projections, and that providing for growth of only 210,000 households per annum will fail to address the significant worsening affordability across the country. The variant projections suggest how planning for 237,000 households per annum, plus at least another 20,000 households per annum is required to address supressed need. When backlog is added to this, there is a requirement for at least 260,000, and towards 300,000 households per annum.
Furthermore, a recent TCPA article ‘New estimates of housing requirements in England, 2012 to 2037’ identifies a requirement for 312,000 homes per annum over the next 5 years to address the past shortfall in housing delivery.
The effects of planning based solely on the 2012-based DCLG projections is perhaps best captured by Professor Christine Whitehead’s comment on the 2012-based DCLG household projections. Following detailed analysis Professor Whitehead stated “One of the biggest concerns is that couples aged between 25 and 34 – at the time when family formation is at its highest - are expected to be less well housed in 2031 than their counterparts in 2011. And if house building cannot be increased at least to the projected levels other household groups will find themselves in the same boat.”
The stage 2 DCLG release highlights further how housing provision significantly in excess of the 2012-based DCLG household projections is required to alleviate the worsening affordability and the projected increase in concealed households in younger age groups.
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Household Projections, Affordability, Housing Crisis, Development Economics